Stock Market Opening Report - December 28,2012

(By Rich Bieglmeier) Stock climbed from the depths of breaking down, and managed to stay in contact with support levels after John Boehner told the House of Representatives to get back to work on Sunday. C'mon, who is kidding who, the Speaker has a killer New Year's Eve party planned, and the mandate was an undercover invitation!

Party favors aside, Wall Street saw it as a hopeful sign that a fiscal cliff deal is possible, and helped the Dow recover more than 100 points and stay on top of 13,000. While, the Dow, S&P, and NASDAQ remained above support as mentioned twice already, each of the indexes triggered bearish MACD corssunders on Thursday; no worries though, at least not yet.

It's the sixth crossunder in the past 52 weeks. Twice in the previous five occasions the S&P was lower one month later; however, both fall offs were nasty, dropping 6.6% and 5.9%, respectively. Well, maybe we ought to worry a little bit; the technical indicator is roughly 50% accurate, two of the previous five means the sixth must be…

With the undercurrent of hope for a change before January 1, 2013, stocks could carry momentum today, but iStock thinks it's unlikely. It seems that some want to go over the cliff for whatever reason. Politics aside, there seems to be common ground on many issues, flattening the tax code and reducing the number of exemptions for high income earners, and reduced growth rates on some spending TBD. The sticking point remains taxes on high income earners.

A little math always helps put things in perspective.

Increasing taxes on those making more than $200,000 or jointly $250,000 equals roughly $80 billion a year according to President Obama; although he frames it as $800 billion over 10 years. Last year, our Federal Government spent something in the neighborhood of $3.7 trillion. The feds spend more than $10 billion a day – that's got to be some form of sickness - $80 billion divided by $10B equals 8 days.  We are going to hit the economy for 8 days or 2% of 2012's spending? Left or right, get to work on the 98% of agreeable territory and get a deal done. If the 98% doesn't work, it won't be too hard to come back for the other 2% at some later date. There is absolutely no reason to goof up 365 days for 8.

Anyway, if D.C. can't find common ground on common ground, then stocks will give up more than $80 billion in market cap in the next few days and risk a lot more than that if support fades.

Maybe we can find some extra money in our iEstimates in the week ahead to help Washington?

Happy New Year!